Wall Street resumed its rally after a dull Wednesday, following Trump’s threat to slap 10% tariff on another $200 billion in Chinese goods. The tension seems to be cooling down now on signals that the United States and China are willing to restart their trade talks to evade a full-blown trade war.
As such, the technology surge has propelled the NASDAQ to a record high powered by Facebook (FB - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) . The industrial sector has also bounced back with Boeing (BA - Free Report) and Caterpillar (CAT - Free Report) — the hardest hit by the recent trade dispute — rising the most.
Renewed optimism also came on high hopes for the Q2 earnings season. Earnings for the S&P 500 index are expected to grow 19.1% from the same period last year on 8.2% higher revenues. This would represent the third consecutive quarter of double-digit earnings growth, a trend that is currently expected to continue in the second half of the year. A strong economy and historic tax cuts will continue to drive earnings higher. Per Thomson Reuters, the S&P 500 companies are expected to post second-quarter profit growth of around 21%.
Further, rounds of upbeat data, signaling improving economic growth, have added to the bullish outlook for stocks. However, volatility and uncertainty will continue to show up as tariff threats are still in place.
In such a scenario, investors are looking for a portfolio that could offer outsized gains relative to the market. In fact, the stocks having a combination of value, growth and momentum could be a winning strategy. This is because value offers exposure to inexpensive stocks undervalued by the market while growth investing harnesses its momentum in earnings to create a positive bias in the market, resulting in rocketing share prices.
Meanwhile, momentum investing fetches profits from buying hot stocks that have shown an uptrend in the past few weeks or months, and hence these stocks seem to be the major beneficiaries of the current market trend.
How to Create Such Portfolio?
Handpicking these stocks with all the three combinations has now become easier with our Zacks Stock Screener. We have screened through stocks with a Value, Growth and Momentum Score of A or B each. These when combined with the top Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential with a frenzy of cheap price, robust growth, and a strong momentum.
We have added extra flavor of a top Zacks Industry Rank. Studies have shown that 50% of a stock's price movement can be attributed to its industry. In fact, an average stock in a strong group is likely to outperform a great stock in a poor group. This is because Zacks Rank is based on the most powerful force impacting stocks prices, which is earnings estimate revisions.
Here are the five picks:
Penske Automotive Group Inc. (PAG - Free Report)
This Zacks Ranked #2 international transportation services company operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. The stock is expected to see earnings growth of 20.65% for this year and falls under a top-ranked Zacks industry (top 11%).
Carrizo Oil & Gas Inc. (CRZO - Free Report)
This Zacks Ranked #2 energy company is engaged in the exploration, development, exploitation and production of oil and natural gas, primarily in proven trends in the Barnett Shale area in North Texas and along the Texas and Louisiana onshore Gulf Coast regions. The stock has an estimated earnings growth rate of 105.59% for this year and belongs to a top-ranked Zacks industry (top 18%).
NCI Building Systems Inc. (NCS - Free Report)
This Zacks Ranked #1 company is an integrated manufacturers of metal products for the building industry. The stock has an estimated earnings growth rate of 77.50% for the ongoing fiscal (ending October 2018) and belongs to a top-ranked Zacks industry (top 22%). You can see the complete list of today’s Zacks #1 Rank stocks here.
GMS Inc. (GMS - Free Report)
This Zacks Ranked #1 company is a distributor of wallboard and suspended ceilings systems. The company's product consists of wallboard, suspended ceilings systems or ceilings and complementary interior construction products in commercial and residential buildings. It is expected to see earnings growth of 61.69% for the fiscal (ending April 2019) and falls under the top-ranked Zacks industry (top 41%).
Cigna Corporation (CI - Free Report)
This Zacks Ranked #2 health services organization provides insurance and related products and services in the United States and internationally. It is expected to see earnings growth of 26.58% for this year and belongs to a top-ranked Zacks industry (top 40%).
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions. New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>